RF's Financial News

Sunday, November 27, 2011

Europe isn’t Vegas – Europe is Toast! You might not know it yet, but you will want to care about what's happening in Europe. Why - because what happens in Europe – is NOT going to stay in Europe. It is going to come here, and YOU are going to get hit with it. Most analysts are going to tell you that Europe will have a plan, but they won’t. Not in any normal sense anyway. There are 6 desperately broken countries that need from $8 to $30 trillion to be made solvent again. No one has that kind of money, and frankly Germany (who has worked hard, saved, not run up debts) is being asked to shoulder the load and a) they can't, and b) they shouldn't. All the machinations we are seeing, all the plans to make plans, all the EFSF's and ECB's are just smokescreens to buy time. The only answer that seems to make sense is that the ‘broken countries’ will leave the EU, go back to their own currencies, default, get their act completely together and then attempt to rejoin the Euro. Will this actually happen - probably not. Instead, we'll probably see a push to continue bailouts with money no one has, until it all collapses.

In any event, the issue here is this that we ARE exposed to Europe. Not only will the top 4 economies of the world be forced into serious slowdowns by European austerity and lower GDP levels, but every nation from the U.S. to China, to Russia, to Brazil has a monetary stake in the banking system there. In our case, the estimates are that U.S. banks have at least $650 Billion in credit default exposure. Do any of our banks have $650 Billion to spare – nope! Some have pushed off parts of their exposure to other insurance companies, and those companies are in no better shape to withstand demand for payment than the banks are.

So, while people rush the stores in their desire to shop till they drop, few are aware of the fact that we face a situation that is virtually 4 times worse than the Lehman Brothers debacle, and the economic contraction we had in 2008. There is no magic bullet to fix this mess. We are in a slow motion train wreck. Let's (for a minute) take the alternate look. Let's just suppose that incredible austerity, along with timed bailouts from the IMF (International Monetary Fund) all work. Well along with austerity come less credit and less spending, and when one of the largest economies of the world (Europe) has to cut back on "buying stuff", it leads other countries (China, the U.S., and the BRICS) to cut back as well. Thus we have a global synchronized recession or depression on our hands. So if the Euro zone comes apart (probable) there will be huge fall out, and we will feel it here for certain. If the Euro zone holds together but has to cut back economic activity, we are going to feel it via recession or depression.

What do we do about it? Save money, stay out of debt, and own physical gold and silver. There’s a reason why gold has appreciated over 20% this year! In the past few weeks gold and silver have sold off. Some of that is because big time funds that were getting redemption calls had to raise cash. If all your equities are underwater, but you're up $500 an ounce on your gold and you have 10,000 ounces - you sell some gold to stave off the redemption calls. Well, this has some people worried. Gold has fallen from $1,850 to $1,650 recently and that has the usual bevy of anti-gold folks laughing and calling for ‘bubbles.’ What they forget is that for the past 10 years gold has been the best performing asset. And at a price of $1,850 it’s up 27% year to date, and at $1,650 it’s still up 20%!

Silver is just $30 an ounce. You can buy 10 ounces of it for what a family spends going to a football game. As fiat currencies continue to melt down, as the Euro zone dissolves, as we are forced to endure another round of QE (Quantitative Easing), and probably bail outs – no other investment makes sense?

This Christmas, do something that 90% of your neighbors won't. Give your children and your friends some silver dollars as gifts. In a few years when other gifts are out of date, those silver dollars will be worth twice what you paid.

The Market:The market just went through its worst Thanksgiving Week since 1973, and the worst in percentage terms since 1932. This was all out selling. Some of it was panic over Europe, some of it was panic over MF Global, some of it was because of the Credit downgrades of Portugal, Hungary and Spain, and some of it was "raising cash" to fend off the redemption and margin calls. But it was ugly! It was especially ugly because 70% of the time the market goes up during Thanksgiving week. The market usually starts heading higher in October, giving us the year-end rally – but so far, not this year. Now, I’m the guy calling for the breakdown of the Euro. I'm the guy who thinks we’re "doomed" economically. Yet I’m also NOT wholesale short this past week. Why, because I also know that we're just one announcement away from QE3.

In 2009, The Ben Bernanke unleashed QE1 (Quantitative Easing 1). We went from DOW 6,600 to over 12,000. So if you shorted at that point, you were crushed. When the market softened up again, The Ben Bernanke came out with QE2, and we put in highs of almost 13,000. Again, if you were short ahead of it, you were hurt very badly. Now with the economy slack, employment soggy, and the market in turmoil – we’re awfully close to hearing of QE3. And that’s what keeps a lot of short sellers out of the market.

QE3 will NOT solve anything, and (like Europe) it kicks the can down the road, but it will create a market run that pushes the market to all time new highs – all on printed money. Heading into December, there must be a last ditch effort to put on a good show, or a lot of fund managers are NOT going to get the holiday bonuses they want. And if they don't muster up some form of rally soon, you can consider that proof positive of just how ugly things really are out there. I'm looking toward leaning long into any late rally if it comes. But if we do get a ‘Santa Claus’ rally, and once it has some distance on it, we're going to start looking at long term put options for the inevitable market fall.

On Friday the market did it’s best to put on a brave show ahead of a weekend, and yes we ended the day red – but only by a few points. In many ways that could have signaled that the selling is over for a while. Nothing goes straight down, and we've been going down a lot of that lately. So, a bounce is in the cards, and if nothing really stupid comes out of Europe this weekend, we might see some green next week.

2012 is going to be quite a remarkable year. You might witness the breakup of Europe, and another 2008-style meltdown here. We're going to see if someone defeats Obama for President. And we're probably going to see an even more volatile market than what we’ve had this year.

Tips:Remember - Gold is up over 20% from a year ago – and over 27% from it’s lows during the year - $1,270+ to $1,650+ on the close on Friday. Have your other equity decisions performed that well? Please consider buying more physical Gold and Silver before it’s too late.

We’re out of virtually everything except: - GLD at 157.49 – now at 163.50, (I’ll be buying more this week), - SLV at 28.00 – now at 30.22, (I’ll be buying more this week),- And HDGE at 25.30 - now at 27.23. (If we get a bounce – I’ll be selling this and buying in later.)

When the bounce comes (and it will), we will use it to start to scale into some long term puts. We are now close enough to 2012 and 2013 that we can buy long dated puts that I completely believe will be rewarding. I still believe that the DOW will visit the 4,500 level in approximately mid-2013, but we’ll start loading puts when the market turns back up.

Speaking of options, I think that it's also time to buy some inexpensive call options on the DOW and S&P. Why? Well along with people liquidating a lot of positions, one of the other issues is that we're coming through a 4-day weekend where no one wanted to be too long. Therefore, if nothing stupid happens, Monday could be a decent day. I'm thinking of the Dec 11th (weekly) S&P 119 calls are only $1.49 now. Could the SPY’s make 119 by December 11th, absolutely – and taking 10 contracts could be rewarding.

Other than that, remember to celebrate the weekend – it’s my favorite holiday (for many reasons).

Disclaimer:Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Sunday, November 20, 2011

They are Dropping Like Flies… Ann Barnhardt of BCM Capital closed her brokerage business this week because of the MF Global scam. Taking excerpts from her post: “November 17, 2011 10:27 AM MST. It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. I could no longer tell my clients that their monies and positions were safe in the futures and options markets - because they are not. And this goes not just for my clients, but also for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. MF Global, a firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let's not sugarcoat this - Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian roulette. I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg, and as the failures begin to cascade there simply isn't that much money in the entire system. I will not consider reforming and reopening Barnhardt Capital Management until Barack Obama has been removed from office AND the government of the United States has been sufficiently reformed and repopulated so as to engender my total and complete confidence in the government.”

As you can see, Miss Barnhardt has no problem expressing her opinion. But, is she right or wrong? I think that she is right, and we are witnessing 40 years of fiat currency craziness all coming to a head. Can we clean it all up? I do not believe we can, because the problems are too deep, too widespread, and too interconnected. Sit back and ponder what we’ve seen during the past 4 years – Lehman Bros, Bear Sterns and MF Global are gone, while Greece, Italy, Slovenia, Belgium, Portugal, Spain, Ireland are all technically insolvent. U.S. housing is still falling, the poor are increasing, food stamps are at record usage, and joblessness is raging. And all of this is happening despite 2 rounds of Quantitative Easing, Operation Twist, Cash for Clunkers, cash for Window Replacement, Government owned General Motors, and our FED lending out $16 trillion to European banks that when asked ‘Who got it?’ - The Ben Bernanke responded: “I don’t know!” And currently The Jefferies Group is about to go belly up – due to their exposure to MF Global.

I think the most telling part of all this is that no one seems to notice. John Corzine was about the most connected person you could name, and was probably going to be the next Treasury Secretary – he’s done! David Tepper (we learned this week) has taken all his funds out of equities. Here are some facts about the poor that certainly shook me:- Last year, 2.6 million more Americans descended into poverty. The largest increase since the US government began keeping statistics.- In 2000, 11.3% of all Americans were living in poverty – today it’s 15.1%.- 22% of the children in the United States are living in poverty. - Over 20 million U.S. children rely on school meal programs to keep from going hungry.- One out of every six elderly Americans now lives below the poverty line.- 45 million Americans (15% of all Americans – one out of every 4 children) are on food stamps – increasing 74% since 2007.- Today – 18% of Americans are on Medicaid – in 1965 only 2% were.- Today – over ½ a million children are homeless!

So where can we invest our money safely? Understand, on any given day the $600 Trillion in outstanding derivatives could take down all the trading houses and all of the exchanges – which is why investing in physical Gold and Silver make sense to me. For your information, we’re beginning to hear of non-delivery of gold and silver after payment. And warnings are beginning to circulate telling everyone to cash out of all gold ETFs because the backing is questionable. I'm just hopeful that the right people get in power so that when the default hits, the reset is done correctly and our kids have a shot at a brighter future.

The Market:Our market is broken. When 200 to 300 point swings are the ‘new normal’, you can bet all semblance of ‘real normal’ is gone. We have a $600 trillion derivative bomb lying in wait, ready to go off at any moment. We have Europe melting, and brokerages imploding. Without more stimuli – QE3 – the economy will continue to crumble. Last week the Fed heads were out in force talking about how Europe could force us to be more accommodative, which is a fancy word for "print more money". So it’s coming, and when it’s announced the market will put on a furious rush higher. However, until it’s announced, we're going to be in a ‘rinse and repeat’ moment. So we’re in a time where the market depends upon free money from The Ben Bernanke, otherwise we will ‘slosh and fall’.

So one tactic is to just buy silver and gold, take possession, and forget the stock market. The only other tactic I can recommend is for you to understand how to trade. Trading means – actively buying something today, and maybe selling half by the close and the other half a day or two or a week later.

Currently the market is set for more down side. However, something happened this week that suggests to me that without something "real" like the FED coming out with QE3, or something really solid out of Europe – we are indeed heading lower. That ‘something’ was that the market rewarded the PUT buyers. You see people buy call options and put options to hedge their positions and to try and make money. Well, most of the time, the Market will generally move in the direction that will punish the most people, most of the time. It's called the "max pain" theory. Coming into this past week, to "punish" the most people the market would have had to trade sideways and slightly higher, but it didn't. This past week the market fell like the proverbial rock. It rewarded the bulk of the options holders who were destined to make the most money. So something went terribly awry, and could signal the shape of things to come.

I’m betting that (minus some rumor or news of a bail out) the market's going to go down and test the 50-day moving averages. On the S&P it has only 8 points to go, but on the DOW it’s got a couple hundred. So, we should be looking at a lower market this week. Normally Thanksgiving is a time for the markets to be fairly strong, so maybe they’ll all pitch in and try and save us, but it sure looks shaky.

Be careful out there, because we’re just one headline away from an all out crash, or a wild run higher.

Tips:We’re out of virtually everything except: - GLD at 157.49 – now at 167.90, and - SLV at 28.00 – now at 31.55,- And HDGE at 25.30 - now at 26.01.

As the miners continue to ‘relatively’ strengthen – thanks to Dave S for recommending Mines Management, MGN. Now if things continue to roll over, I continue playing the short side using HDGE.

Disclaimer:Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Sunday, November 13, 2011

I prefer the company of peasants because they have not been educated sufficiently to reason incorrectly. ~Michel de Montaigne

Are we there yet? Are we at the bottom? Can we trust people again? Well, according to Jack Abramoff (past DC Lobbyist): “As many as a dozen members of Congress and their aides took part in insider trading based on foreknowledge of market moving information, sometimes gaining several hundred thousand dollars. But it's basically legal, because the SEC has largely determined that trading stocks based on advance knowledge of action in Congress is not insider trading.” What? If you or I get a phone call from someone in a high level position at a public company, and we go and act on that news – you, the informant and I can all be imprisoned. But if you're a US Congressman and you get that same phone call; then, you can go act on the information, and it's deemed as "fine" by the SEC. How does such a double standard exist?

Is it safe? Have we solved the currency issues?“According to China's National Foreign Exchanges Administration, China's gold reserves have recently increased. Recently China has been opening their own mines and buying mines around the world, thus accumulating both spot buying in the market, and their own production capacity.” For many years, U.S. Central Banks sold their gold holdings. They stopped selling in 2009, and became buyers of the metal again. Most nations want more exposure to gold; however, gold supply is limited and if everyone wants it at the same time, it pushes the price up. No one wants to buy anything that's been driven higher, so they have done everything they can to accumulate it, while at the same time, not disrupt the price.

Or are we simply re-arranging the deck chairs on the Titanic:“Standard and Poor’s reported this week that ALL BANK earnings in Q3 were from Credit/Debit Valuation Adjustments (CVA/DVA). This is where the lenders booked profits as their credit-worthiness declined.” Yes – that is the same as a Bank making money – betting against itself.

And just when you thought it was safe to purchase GM stock again:“The United Auto Workers retirement trust fund, which provides health benefits to over 820,000 people, has underfunded by almost $20B, due to rising medical costs and poor investment performance.” This week when the CEO of GM was asked about their underfunded pension, he flat out said: "I'm not going to talk about that".

And last but not least – those pesky European Banks:“European banks are sitting on heaps of exotic mortgage products and other risky assets that predate the financial crisis, in addition to all that Eurozone sovereign debt. Royal Bank of Scotland (RBS) is exposed to nearly €80B worth of risky mortgage assets, eight times more than its sovereign debt burden. Also: HSBC Holdings = €54B; Deutsche Bank = €51B; and ING = €36B.” The issue here is not only the amount, but also how far and wide the insurance on those amounts lead – U.S. fair warning!

So – can we still win the war or are we fighting a meaningless battle? Each day I get closer to moving in with the camp that says it's over. The Eurozone has had ample time to ‘fix things’ (over 18 months starting with Greece) – and they still haven’t – because they can’t.

You see, between 1944 and 1971 the world experienced incredible global stability and growth because the major economies of the world kept their currencies in balance with a basic gold standard. Debt loads remained manageable, because they could only create currency as long as it was pegged to a loose value of gold. Markets were free to set interest rates, and savers were rewarded with stable and realistic returns. As more people saved their money, pools of currency were created which banks could then lend to productive companies and create more jobs. But when the Bretton Wood accord was demolished in 1971, and President Nixon closed the "gold window", by 1974 we were thrown into one of the most horrid recessions of our modern history. Likewise, our current system of money supply creation, and constant borrowing is destined to fail, no matter how hard everyone "agrees" to keep things stable.

So what do we know? While the US dollar is still loosely recognized as the "reserve currency", everyone now understands that it's a fantasy. It's not stable, it's not pegged to anything, and a group of 12 people at the Federal Reserve can print as much money as they think they want or need at the drop of a hat. But behind the scenes there are choices. It seems to me, that the first big push is going to be for SDR's (Special Drawing Rights) to act as the new reserve currency. The only difference between SDR’s and the paper dollars we have now is that the International Monetary Fund and/or the World Bank would be the only issuers. And yes there are groups working on the concept of a Gold and Silver standard again. However, right now, to have gold be used as a reserve, the price would have to be somewhere around $7,000 per ounce, to "cover" the dollars in circulation, and to encompass all the world’s currencies the price of gold may have to reach $40,000 / ounce.

We predicted in 2001 that gold would be the single best investment idea, because we connected the ‘debt dots’ and those ‘dots’ added up to a picture that was unsustainable. We hit the wall in 2008, and now the entire world is suffering the consequences of printing too much currency, promising too many things, and not being able to shoulder the load. Hopefully when we emerge on the other side, we'll have the intelligence to realize that often simpler is better.

The Market:

Wild ride this week – ya think? Everyone knows that Greece is impossible to save, with Italy running a close second. Most believe that the PIIGS (Portugal, Ireland, Italy, Greece and Spain) are ready for slaughter, and as they fall away, it’s going to spread to the U.S. Now, I remember the days where you would ‘go long’ for 4 months, and you made your money as the market made long grinding runs. You didn't go short for a day, but rather you would go short for 2 months. But when today’s volatility causes a market to fall 400 points in a day, and then recover again in two days - trading houses make a years worth of profits in two days. In fact, during the month of October – if we totaled all of the daily swings – they totaled over 10,000 points! If you're addicted to charts, the pattern on the S&P is a bit scary right now. Unless we get some more points, and soon, we'll have developed a pattern of "lower highs". We desperately need a close over 1,275 on the S&P to give the bulls a glimmer of hope that this bullish run is going to last. If we put in another close or two below that, we could be in for more downside, before our next bounce. Unfortunately with this chop, I think you only have a few choices. You can just buy gold and silver and wait. Or, you can learn how to be more nimble by using the tools that modern investing platforms give us.

Just because you have a job, doesn't mean you can't put in conditional orders. By following me on Twitter, I might say that I like a particular stock over $30.00. Well, with today's advanced platforms you can put in a conditional buy order – to buy a number of shares that particular stock if it gets to $30.05. If it does and your order gets filled – you can then put in a conditional ‘stop/sell’ order at $29.70. In some ways I find that it works better than sitting in front of a screen all day. It takes the emotion out of the decision. You don't double guess yourself out of a trade. You have a defined entry, and a defined stop. We let the market take care of the rest.

Tips:

We have some profits in our long positions, but I'm guarding them closely. I'm not yet convinced they're going to get this market up yet, so we might have to cash out and wait on a better market "mood". If we don’t get more bad news out of Europe on Sunday, we might be able to add to Friday's gains. Our current short-term holdings include:- GLD at 157.49 – now at 174.05, and - SLV at 28.00 – now at 33.7,- DIA at 121.24 – now at 121.55,- MRVL at 14.66 – now at 14.92, - NBR at 20.00 – now at 20.53.

Disclaimer:Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Sunday, November 6, 2011

This week was a little bit of a travel week for me – and as I settled back into my room on Friday night – I noticed that Suze Orman was on. For those who don't know who she is, USA Today called her a ‘one-woman financial advice powerhouse’. She is undeniably America's most recognized expert on personal finance. Combine her with Jim Cramer – and I’ve spent a fair amount of time (over the years) denouncing their collective wisdom as an absolute train wreck. Suze Orman shocked me on her show when she said: "Up until 2007, I thought I had it all figured out. But then it all went horribly wrong. What I didn't take into consideration was that - I trusted the people at the top to be giving us the truth. But we found out that the truth wasn't there, and we were in a time of lies and corruption". So here is America’s most recognized expert on personal finance telling everyone that what she and the rest of us have been getting fed is a pack of financial lies. For the next hour she told people: (a) get back to the basics, (b) get out of debt, (c) train your kids to get out of the "buy me this" syndrome, (d) don't buy stuff you can't afford, and (e) save your money because there are very bad times ahead. This was such a turn around from the last time I heard her speak that I said: “Misery Loves Company!” Don’t get me wrong – Suze Orman knows more about the taxes on 401K's and Roth IRA’s than my accountant. Suze knows more about FICO scores than I'll ever know in my lifetime. My point to all of the above is that it’s one thing for someone to make a mistake, but it's very different when you openly mislead people. Suze Orman is now saying what we’ve been saying for years - 90% of the financial information that you are seeing and hearing is misleading information. If this economic crisis has taught us anything, it is that you have to listen and decide for yourself the financial elements that make sense for you. Sometimes it's not easy going against the grain. Welcome Ms. Orman – welcome back to the land of the living! In early 2001, we decided Gold was to be the ultimate investment, and we bought as much as we could afford. Then in 2007, we decided that Silver was the next best investment, and again we bought as much as we could afford.

To the fundamentals:- The percentage of the population working full time now stands at 47.2%. We need to go all the way back to 1975 to find a ratio that low in October. So The Ben Bernanke, with the working population and wages being stagnant or down - Where’s the Growth? - Of the 280 most profitable companies in the U.S., 78 paid no federal income tax in at least one year over the last three, and 30 reported a cumulative negative income tax over the period. The country is in debt to it's eyeballs, and one of it's biggest companies GE pays NO taxes, yet it's CEO trots around with Obama and preaches jobs creation, while shipping his own jobs over to China. - U.S. investors have pulled $80B out of equity funds this year, but this has been more than offset by $200B in corporate stock buybacks. With the cost of debt being very low, and the cost of equity very high, many find it logical to float debt to repurchase stock. Did you know that while boosting their share prices by buying so much of their own stock, we’ve also created the largest corporate debt load in US history? Companies have borrowed heavily on the heels of Bernanke's 0% interest, but (like Greece) one day it's going to have to be repaid.

And then there’s Goldman Sachs with over 30 alumni stationed in power positions all around the globe, we’re seeing:- MF Global, run by John Corzine (a Goldman alum – who helped bankrupt New Jersey) is now in the hole for $1.6 Billion, and we all know he won't go to jail.- Gary Gensler (also from Goldman), the chairman of the U.S. Commodity Futures Trading Commission under President Barack Obama – overseeing over $5 Trillion in commodities trading each day. Mr. Gensler worked with Sen. Phil Gramm and Alan Greenspan to exempt credit default swaps from regulation, which led to the collapse of AIG and has resulted in the largest taxpayer bailout in US history. Gensler also worked on the deregulation of electronic energy trading, which led to the downfall of Enron, and supported the Gramm-Leach-Bliley Act, which allowed American banks to become "too big to fail"

Do you think it's possible that what these people do as far as global economic policy might all be in favor of shielding, abetting and strengthening Goldman?

The Market:Greece is toast. The EU is disintegrating. Each hour of every day brings a new scheme, a new plan, or a new idea. Nothing they are doing is going to get the debts repaid, thus at some point default and defection become the fact.

Right now there are several forces tugging at us, and that makes it a bit harder to figure out the short-term direction. - U.S. investors have pulled $80B out of equity funds this year, but this has been more than offset by $200B in buybacks. It’s obvious that John Q. Public is scared over global events. However, insiders are simply using the cheapest credit rates in history to juice their stock. If you're a CEO and you have 10 million shares of company stock, why not go borrow a billion dollars, and buy company stock? The stock rises making you richer, and if something happens the Company takes the hit.- Each hour, some form of news comes out of Europe concerning Greece and also a bankrupt Italy - making for a huge market chop.- It’s the Holiday season, where November and December have historically been the two best months for the fund managers to make their giant year of end bonuses. So fund managers want the market up, and the under performing ones will go for broke putting the last of their money to work.- Quantitative Easing 3 (QE3) is on the way. There's no question Bernanke will unleash more stimulus, starting with buying more mortgage backed securities (MBAs), and from there, who knows how much he'll print and spend. - Finally, each time the world is in an economic funk, we create a war. Tensions over Israel and Iran are now white hot – so watch for missiles flying sometime soon?

Right now it looks like we might be in for some short term selling, but they'll offset that with random, well timed rumors that will reverse any selling for a short-time – so please be cautious. If we can get the DOW and S&P to hold over their 200-day moving averages, we could see more upside. But if these averages hold as upper resistances, then we should be moving lower. Right now - my guess is that we end the week lower than we start it.

Tips:We trade stocks. We try to trade based upon fundamentals, but there are none. We try to trade on based upon the technicals, but because we're in a world of rumors, designed to move things "their way" – we can’t do that either. We’re stuck trading on the insanity of the moment, and unfortunately it’s working! The moment we see the dollar dropping we buy materials and commodity companies like ANR, CLF,etc. If the dollar drops, U.S. stocks move up, and materials and commodities move the most. Like I said last week - desperate funds are going to seek high “alpha” stocks like: Apple (AAPL), Amazon (AMZN), Caterpillar (CAT), and Deckers (DECK). Funds that need dramatic returns won’t take chances with regular companies – so also look at Priceline (PCLN). And consider the technology ETF the XLK. Although it's not a rocket, the Holiday season is a big tech time and if Apple or Priceline are too expensive, the XLK may fit in nicely.

We stopped out of many of our short-term holdings (with gains) last week, and we’re left holding:- GLD at 157.49 – now at 170.75, and - SLV at 28.00 – now at 33.25.

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